Euro zone economy picks up pace but Germany lags

May 1814:012015

A slowdown in Germany weighed on the euro zone in the first quarter, but the bloc’s economy still grew at its fastest in almost two years as cheap food and fuel boosted spending and a central bank stimulus program kicked in. Gross domestic product in the 19 countries sharing the euro rose 0.4 percent quarter-on-quarter for a 1.0 percent year-on-year rise – just below forecasts in a Reuters poll of economists.

European Union statistics office Eurostat gave no detailed breakdown with Wednesday’s data, while economists said growth was likely to have been helped by lower food and energy prices, a weak euro and the asset-buying program the European Central Bank started in early March. “It is evident that improved growth was due to strengthened domestic demand. Domestic demand was certainly behind the improved growth in France and Italy, and it also reportedly held up reasonably well in Germany,” said Howard Archer, economist at IHS Global Insight.

Overall, however, growth in Europe’s largest, and traditionally export-led, economy Germany slowed more than expected as imports rose more sharply than sales abroad. That net drag from trade activity was replicated across the bloc as muted global growth curbed export growth despite a weaker euro, Archer said.

Overall, however, growth in Europe’s largest, and traditionally export-led, economy Germany slowed more than expected as imports rose more sharply than sales abroad. That net drag from trade activity was replicated across the bloc as muted global growth curbed export growth despite a weaker euro, Archer said.